The GBP/USD currency pair has found a little bit of support near the 1.14 level, an area that has been important over the last couple of days. Ultimately, this is a market that will continue to see a lot of noisy behavior, especially as the Federal Reserve is likely to continue tightening. If that’s going to be the case, then it’s very difficult to imagine a situation where the British pound suddenly takes off. The British pound is going to continue to be very noisy, as there are a lot of major issues with the British economy. Look at this chart, the market is going to continue to be very noisy, but I do like the idea of shorting any signs of weakness after a rally.
GBP/USD Oversold Market
- At this point we are looking at a market that is oversold, so it does make a certain amount of sense that we would see a little bit of a bounce.
- The bounce should be a shorting opportunity in a market that has been negative for quite some time.
- The 50-Day EMA is currently sitting around the 1.18 level and drifting lower, offering a potential barrier.
- Looking at this chart, I think it’s only a matter of time before you see value hunters coming back in, and therefore I think you are looking for an opportunity.
The market is more likely than not going to continue to see the British pound continue to get hammered due to the fact that the Bank of England has already promised that there was going to be a recession, and of course when that happens people start to run towards the greenback for safety anyway. Furthermore, the market will continue to be holding its breath and waiting for what Jerome Powell is going to say on Wednesday. It’s not necessarily that we are going to be worried about rate hikes, it’s that people are going to be paying attention to the statement and press conference.
I think ultimately this is a market that will continue to see negative pressure in the drop down to the 1.1250 level, but it doesn’t necessarily mean that it has to happen right away. Over the longer term, I think this is a situation where you have the ability to see opportunities time and time again, so therefore I’m simply waiting for signs of exhaustion after this bounce is to get short again.
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